Did a multi-program design college qualify as an entity primarily teaching qualified motion-picture production services?

Plain-English summary

A Florida college taught computer graphics, marketing and advertising, interior design, fashion design, multimedia design, and game design and development. It had a fixed Florida campus, was licensed under Chapter 1005, and enrolled more than 500 students.

Florida denied the motion-picture educational entity exemption. Although some courses and career paths could be useful in film production, the programs had broad objectives across many industries. The school did not establish that it was primarily engaged in teaching students to perform activities or services directly connected with producing qualified motion pictures.

The school met three statutory conditions—location, licensing, and enrollment—but failed the primary-engagement requirement.

What this means for you

Offering animation, graphics, audio/video, costume, or related courses is not enough by itself. Florida examined the institution's overall programs, curricula, and career objectives to decide whether film-production training was its chief activity.

Common questions

Did the school have enough students? Yes. It had more than the statutory 500-student minimum.

Was it properly licensed and located in Florida? Yes. It held the described Chapter 1005 license and operated at a fixed Florida campus.

Why was the exemption denied? The school's programs prepared students for many industries and were not chiefly focused on services directly connected to qualified motion-picture production.

Did motion-picture-related graduates prove qualification? No. The ruling focused on the institution's primary educational activity, not isolated courses or graduate placements.

Citations and references

• Fla. Stat. § 212.0602 (requirements for motion-picture educational entities)
• Fla. Stat. § 212.031(1)(a)9. (qualified production services)
• Fla. Stat. § 212.08(5)(f), (12) (production equipment and master-media exemptions referenced by section 212.0602)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-030

Original ruling text

SUMMARY
QUESTION: Does Taxpayer qualify for the exemption for motion picture education entities granted by s. 212.0602?
ANSWER - Based on Facts Below: No. In order for the exemption granted in s. 212.0602, F.S., to apply, the
following requirements must be met: Taxpayer must be primarily engaged in teaching students to perform any of the
activities or services described in s. 212.031(1)(a)9., F.S.; Taxpayer must conduct classes at a fixed location in
Florida; Taxpayer must be licensed under chapter 1005, F.S.; and, Taxpayer must have at least 500 enrolled
students.
Taxpayer conducts classes at a fixed location in Florida, is licensed under chapter 1005, F.S., and has at least 500
enrolled students. However, Taxpayer is not construed to be "primarily engaged" in teaching students to perform work
in a job that is directly connected with the production of "qualified motion pictures."

September 28, 2006

Re: Technical Assistance Advisement 06A-030
Sales and Use Tax - Exemption for Motion Picture Educational Entities
Section(s): 212.0602, 212.031(1)(a)9., and 212.08(5)(f) and (12), Florida Statutes
XXX (Taxpayer)
FEI#: XX
Dear:
This response is in reply to your letter dated June 27, 2006, requesting the Department's issuance of a Technical
Assistance Advisement ("TAA") pursuant to Section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the
exemption for motion picture educational entities. An examination of your letter has established that you have
complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the Department is hereby
granting your request for issuance of a TAA.
Facts and Taxpayer Position
Your letter of June 27, 2006 provides the following in pertinent part:
The taxpayer satisfies the four requirements, as stipulated in the Florida Statutes, necessary for receiving the
exemption for motion picture educational entities. The four requirements are to be primarily engaged in teaching
students to perform qualified motion picture services, to conduct classes at a fixed location within Florida, to have at
least five hundred enrolled students, and to have a license under Chapter 1005 from the Florida Department of
Education. Thus, the taxpayer should be entitled upon presentation of an appropriate exemption certificate to its
vendors to purchase and lease tangible personal property and to lease or license real property free of sales and use

tax.

The taxpayer offers the following degree programs that teach students the skills necessary for providing motion
picture production services:

1. Multimedia Design
   * Bachelor Degree
   * Relevant Coursework Examples - Photoshop
   - Introduction to Video
   - Advanced Post-Production Techniques
   - Special Effects
   - 3D Animation I & II
   - Media Production
   - 3D Modeling
   - Introduction to Audio
   - Advanced Director
   - Advanced Digital Imaging
   - Multimedia Design
2. Computer Graphics
   * Bachelor and Associate Degrees
   * Relevant Coursework Examples - Photoshop
   - Advanced Digital Imaging
   - Advanced Director
   - Professional Production Techniques
   - Studio Techniques
   - Computer Graphics Internship
   3.Game Design & Development
   * Bachelor Degree
   * Relevant Coursework Examples - Photoshop
   - Fundamentals of Animation
   - 3D Animation I & II
   - Concept Design and Scripting for Games
   - Character Development
   - 3D Texturing and Lighting
   - Environment Design
   - Digital Audio for Gaming
   - Game Development

- 3D Modeling

4. Interior Design
   * Bachelor Degree
   * Relevant Coursework Examples - Fundamentals of Lighting
   - Entertainment Design
   - 3-D Computer-Aided Design
5. Fashion Design & Merchandising
   * Bachelor Degree
   * Relevant Coursework Examples - Clothing Construction I & II
   - Costume Design
   - Tailoring and Pattern Grading
   - Internship

The taxpayer offers to students a variety of courses necessary for completing the aforementioned degree programs.
The courses within the degree programs teach students the skills necessary for performing motion picture production
services. A summary of several relevant courses follows:
1. Introduction to Video introduces students to basic concepts and industry standard software involved in video
productions within a multimedia environment. The course shows them how to generate a concept, create the story,
begin scripting, use basic lighting effects, shoot, and edit.
2. Special Effects explores a variety of special effects in the areas of audio and video compositing, editing different
effects for different moods, and using blue screen compositing techniques.
3. Costume Design introduces costume design strategies for theatre, television, and film productions. Students
discuss the role of costume designer with the production process and are expected to utilize script reading and
character development skills in the design and construction of appropriate costumes.
4. Advanced Post Production Techniques allows students to incorporate sound and video into final media creations.
Students explore audio sweetening, advanced editing, MIDI, looping sound, 3D techniques, and roto-scoping.
5. Fundamentals of Lighting develops a working knowledge of light sources, luminaries, electrical control, layout, and
specifications as applied to design theory.
6. Fundamentals of Animation covers aspects of the animation process and animation techniques. Students produce
character sketches morph simple objects, create walk and run cycles, and develop professional storyboards.

7. Other Courses * Photoshop

• Character Development
• 3D Animation I & II
• Concept Design and Scripting for Games
• Advanced Digital Imaging

You further provide that graduates have accepted various motion picture related positions with motion picture,
entertainment, and production companies. In addition, Taxpayer has a fixed campus location in Florida; Taxpayer
currently has 934 enrolled students; and, Taxpayer is licensed by the Commission of Independent Education pursuant
to the provisions of Chapter 1005, Florida Statutes, and Rule Chapter 6E, Florida Administrative Code.
You provided a copy of the Notification of License by Means of Accreditation, the License by Means of Accreditation
and Commission for Independent Education Approved Data, which reflects the programs taxpayer is licensed to
teach, which are: Associate of Science and Bachelor of Fine Arts in Computer Graphics, Bachelor of Fine Arts in
Fashion Design and Merchandising, Bachelor of Fine Arts in Game Design and Development, Bachelor of Fine Arts in
Interior Design, Associate of Science and Bachelor of Science in Marketing and Advertising, and Bachelor of Fine Arts
in Multimedia Design.
On August 7, 2006, pursuant to a request for additional information, the Department received a copy of Taxpayer's
2005 catalog and the following enrollment figures:
1) Multimedia Design

113

2) Computer Graphics

92

3) Game Design & Development
4) Interior Design

102

264

5) Fashion Design and Merchandising

296

Total Enrollment in Relevant
Course of Study

867

Finally, on August 16, 2006, the Department received correspondence indicating that Taxpayer currently has 945
students enrolled at the XX location, not 934, as mentioned in your letter dated June 27, 2006.
Requested Advisement
You ask if Taxpayer qualifies for the exemption for motion picture educational entities granted by s. 212.0602, F.S.
Applicable Authority
Section 212.0602, F.S., provides the following:

To facilitate investment in education and job training, there is also exempt from the taxes levied under this chapter,
subject to the provisions of this section, the purchase or lease of materials, equipment, and other items or the license
in or lease of real property by any entity, institution, or organization that is primarily engaged in teaching students to
perform any of the activities or services described in s. 212.031(1)(a)9., that conducts classes at a fixed location
located in this state, that is licensed under chapter 1005, and that has at least 500 enrolled students. Any entity,
institution, or organization meeting the requirements of this section shall be deemed to qualify for the exemptions in
ss. 212.031(1)(a)9. and 212.08(5)(f) and (12), and to qualify for an exemption for its purchase or lease of materials,
equipment, and other items used for education or demonstration of the school's curriculum, including supporting
operations. Nothing in this section shall preclude an entity described in this section from qualifying for any other
exemption provided for in this chapter.
Section 212.031(1)(a)9., F.S., provides:
(1)(a) It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the
business of renting, leasing, letting, or granting a license for the use of any real property unless such property is:

9. Property used as an integral part of the performance of qualified production services. As used in this subparagraph,
   the term "qualified production services" means any activity or service performed directly in connection with the
   production of a qualified motion picture, as defined in s. 212.06(1)(b), and includes:
   a. Photography, sound and recording, casting, location managing and scouting, shooting, creation of special and
   optical effects, animation, adaptation (language, media, electronic, or otherwise), technological modifications,
   computer graphics, set and stage support (such as electricians, lighting designers and operators, greensmen, prop
   managers and assistants, and grips), wardrobe (design, preparation, and management), hair and makeup (design,
   production, and application), performing (such as acting, dancing, and playing), designing and executing stunts,
   coaching, consulting, writing, scoring, composing, choreographing, script supervising, directing, producing,
   transmitting dailies, dubbing, mixing, editing, cutting, looping, printing, processing, duplicating, storing, and
   distributing;
   b. The design, planning, engineering, construction, alteration, repair, and maintenance of real or personal property
   including stages, sets, props, models, paintings, and facilities principally required for the performance of those
   services listed in sub-subparagraph a.; and
   c. Property management services directly related to property used in connection with the services described in subsubparagraphs a. and b.
   This exemption will inure to the taxpayer upon presentation of the certificate of exemption issued to the taxpayer
   under the provisions of s. 288.1258.
   Section 212.08(5)(f) and (12), F.S., provide:

(f) Motion picture or video equipment used in motion picture or television production activities and sound recording
equipment used in the production of master tapes and master records.-1. Motion picture or video equipment and sound recording equipment purchased or leased for use in this state in
production activities is exempt from the tax imposed by this chapter. The exemption provided by this paragraph shall
inure to the taxpayer upon presentation of the certificate of exemption issued to the taxpayer under the provisions of s.
288.1258.

2. For the purpose of the exemption provided in subparagraph 1.:
   a. "Motion picture or video equipment" and "sound recording equipment" includes only tangible personal property or
   other property that has a depreciable life of 3 years or more and that is used by the lessee or purchaser exclusively as
   an integral part of production activities; however, motion picture or video equipment and sound recording equipment
   does not include supplies, tape, records, film, or video tape used in productions or other similar items; vehicles or
   vessels; or general office equipment not specifically suited to production activities. In addition, the term does not
   include equipment purchased or leased by television or radio broadcasting or cable companies licensed by the
   Federal Communications Commission. Furthermore, a building and its structural components are not motion picture or
   video equipment and sound recording equipment unless the building or structural component is so closely related to
   the motion picture or video equipment and sound recording equipment that it houses or supports that the building or
   structural component can be expected to be replaced when the motion picture or video equipment and sound
   recording equipment are replaced. Heating and air-conditioning systems are not motion picture or video equipment
   and sound recording equipment unless the sole justification for their installation is to meet the requirements of the
   production activities, even though the system may provide incidental comfort to employees or serve, to an
   insubstantial degree, nonproduction activities.
   b. "Production activities" means activities directed toward the preparation of a:
   (I) Master tape or master record embodying sound; or
   (II) Motion picture or television production which is produced for theatrical, commercial, advertising, or educational
   purposes and utilizes live or animated actions or a combination of live and animated actions. The motion picture or
   television production shall be commercially produced for sale or for showing on screens or broadcasting on television
   and may be on film or video tape.

(12) PARTIAL EXEMPTION; MASTER TAPES, RECORDS, FILMS, OR VIDEO TAPES.(a) There are exempt from the taxes imposed by this chapter the gross receipts from the sale or lease of, and the
storage, use, or other consumption in this state of, master tapes or master records embodying sound, or master films
or master video tapes; except that amounts paid to recording studios or motion picture or television studios for the
tangible elements of such master tapes, records, films, or video tapes are taxable as otherwise provided in this
chapter. This exemption will inure to the taxpayer upon presentation of the certificate of exemption issued to the
taxpayer under the provisions of s. 288.1258.

(b) For the purposes of this subsection, the term:

1. "Amounts paid for the tangible elements" does not include any amounts paid for the copyrightable, artistic, or other
   intangible elements of such master tapes, records, films, or video tapes, whether designated as royalties or otherwise,
   including, but not limited to, services rendered in producing, fabricating, processing, or imprinting tangible personal
   property or any other services or production expenses in connection therewith which may otherwise be construed as
   constituting a "sale" under s. 212.02.
2. "Master films or master video tapes" means films or video tapes utilized by the motion picture and television
   production industries in making visual images for reproduction.
3. "Master tapes or master records embodying sound" means tapes, records, and other devices utilized by the
   recording industry in making recordings embodying sound.
4. "Motion picture or television studio" means a facility in which film or video tape productions or parts of productions
   are made and which contains the necessary equipment and personnel for this purpose and includes a mobile unit or
   vehicle that is equipped in much the same manner as a stationary studio and used in the making of film or video tape
   productions.
5. "Recording studio" means a place where, by means of mechanical or electronic devices, voices, music, or other
   sounds are transmitted to tapes, records, or other devices capable of reproducing sound.
6. "Recording industry" means any person engaged in an occupation or business of making recordings embodying
   sound for a livelihood or for a profit.
7. "Motion picture or television production industry" means any person engaged in an occupation or business for a
   livelihood or for profit of making visual motion picture or television visual images for showing on screen or television
   for theatrical, commercial, advertising, or educational purposes.
   Response
   In construing statutory exemptions from tax, the Department must follow the fundamental rule of statutory construction
   established by the Florida Supreme Court, which mandates that exemptions from, or exceptions to, taxing statutes are
   special privileges granted by the legislature and must be strictly construed, "with any doubt being resolved in favor of
   the state." State v. Dickinson, 286 So.2d 259 (Fla. 1974).
   In order for the exemption granted in s. 212.0602, F.S., to apply, the following requirements must be met: Taxpayer
   must be primarily engaged in teaching students to perform any of the activities or services described in s.
   212.031(1)(a)9., F.S.; Taxpayer must conduct classes at a fixed location in Florida; Taxpayer must be licensed under
   chapter 1005, F.S.; and, Taxpayer must have at least 500 enrolled students.
   A review of the facts presented clearly reveals that Taxpayer conducts classes at a fixed location in Florida, is

licensed under chapter 1005, F.S., and has at least 500 enrolled students. The remaining issue is whether or not
Taxpayer is primarily engaged in teaching students to perform work in a job that is directly connected with the
production of "qualified motion pictures." The term "primarily engaged," for purposes of this exemption, is not defined
by statute. Thus, it is necessary to look to principles of statutory construction. Words of common usage, when used in
a statute, should be construed in their plain and ordinary sense. Pederson v. Green, 105 So.2d 1 (Fla.1958). The
word "primarily" is defined in Webster's Collegiate Dictionary, Unabridged, Tenth Edition, 1999, as follows: "1. for the
most part: Chiefly ... 2: in the first place: ORIGINALLY ...." The word "engaged" is defined as follows: " ...1: involved in
activity: OCCUPIED ..." Id.
To determine if the institution is "primarily engaged" or chiefly involved in teaching students to work in a job that is
directly connected with the production of qualified motion pictures, it is necessary to look at each program's curriculum
and objective(s). Taxpayer's course catalog provides the following program descriptions. Also included are possible
career paths by degree, as provided on Taxpayer's website.
Associate of Science Degree in Computer Graphics: This program "combines the fundamentals of graphic design,
advertising and design with general education courses .... The objective of the program is to provide students with the
skills necessary for entry level positions in the graphic design industry." Graphic Designer, Photo Imager, Electronic
Publisher, Marketing Designer, Production Artist, and Package Designer are listed as possible career opportunities for
students with this degree.
Bachelor of Fine Arts Degree in Computer Graphics: This program "prepares future designers to fill the demands
of an increasingly visually oriented audience. The computer graphics curriculum balances the principles of advertising
and design with advanced training in technology and production." Graphic Designer, Photo Imager, Electronic
Publisher, Marketing Designer, Production Artist, and Package Designer are listed as possible career opportunities for
students with this degree.
Associate of Science Degree in Marketing & Advertising: This program is "designed to prepare students for
various marketing, sales, and retail store management positions; to assist existing marketing managers and sales
professionals in upgrading their skills; and to open up new career opportunities within the marketing field." Account
Executive, Marketing Manager, Sales Promotion, Market Researcher, Public Relations Specialist, and Sales
Executive are listed as possible career opportunities for students with this degree.
Bachelor of Science Degree in Marketing & Advertising: This program "provides students with a balanced
curriculum centered on a body of knowledge, which involves planning, implementing, organizing, and/or controlling the
activities required in the exchange of goods and services with customers. The program offers a solid background in
the concepts of marketing, business & advertising." Account Executive, Marketing Manager, Sales Promotion, Market
Researcher, Public Relations Specialist, and Sales Executive are listed as possible career opportunities for students
with this degree.
Bachelor of Fine Arts Degree in Interior Design: This program is "designed to prepare students for professional
opportunities in the field of interior design in order to enhance the function, qualify and safety of interior spaces. The
interior design program attracts students who want to be challenged both creatively and technically, people who have

aesthetic sensitivity and who understand the importance of using space effectively and efficiently." Commercial
Designer, Drafter, Computer Aided Designer, Entertainment Designer, Hospitality Designer, Staff Designer,
Showroom Consultant, Residential Designer, and Model Homes Designer are listed as possible career opportunities
for students with this degree.
Bachelor of Fine Arts Degree in Fashion Design & Merchandising: This program "provides students with the
expertise to design and communicate their ideas combining theoretical elements of design with creative and practical
approaches to the solution of problems pertaining to the functional quality of marketable products." Fashion Designer,
Assistant Designer, Costume Designer, Merchandise Assistant, Junior Designer, Textile Artist, Production Assistant,
Fashion Stylist Trainee, and Assistant Buyer are listed as possible career opportunities for students with this degree.
Bachelor of Fine Arts Degree in Multimedia Design: This degree "trains students in a broad range of areas - web
design, print media, 3-D modeling and animation, and digital audio and video production - giving them the edge of
versatility." Storyboard Artist, Multi-Media Artist, Compositor, Web Designer, Background Artist, Audio/Video
Specialist, and Production Artist are listed as possible career opportunities for students with this degree.
Bachelor of Fine Arts in Game Design & Development: This program "provides training in principles and
techniques used to create interactive 2D and 3D computer games. Students will learn design software, programming
languages, modeling and animation skills, networking principles, level design and game engines used to design and
develop games, and will examine market research and business concepts related to game production and distribution
processes. Game Tester, Producer, Character Artist, Level Designer, Sound Designer, Texture Artist , Background
Artist, and Screenwriter are listed as possible careers for students with this degree.
You have indicated that Taxpayer's programs are designed to teach students to perform qualified production services.
You even mention a few courses that you feel teach students to perform such services. However, keep in mind that
qualified production services are activities or services performed directly in connection with the production of a
qualified motion picture. While the programs and curriculum that you mention may be useful to someone wishing to
seek employment in motion picture production, they are not focused specifically on teaching students to perform the
activities or services directly in connection with the production of motion pictures. Instead, Taxpayer offers multiple
degree programs with a broad curriculum that would be advantageous to students wishing to perform work in a
number of different positions for different industries. Consequently, it cannot be said that Taxpayer is primarily
engaged in teaching students to perform activities or services directly connected to motion picture production.
In conclusion, Taxpayer has not established that all of the requirements provided in section 212.0602, F.S., have been
met. Therefore, Taxpayer does not qualify for the exemption sought in the request for this advisement.
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding on the
Department only under the facts and circumstances described in the request for this advice as specified in Section
213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised
that subsequent statutory or administrative rule changes, or judicial interpretations of the statutes or rules, upon which
this advice is based, may subject similar future transactions to a different treatment than expressed in this response.

You are further advised that this response, your request and related backup documents are public records under
Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s.213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the
undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this
response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 15 days of the date of this letter.
Sincerely,
Heather S. Miller
Senior Tax Specialist
Technical Assistance and Dispute Resolution
(850) 922-4835
HSM/
Ctrl# 22144